60% of SMEs would accept more EU regulation for closer trade ties

• A decade on from the 2016 referendum, 74% of UK SME leaders want a closer trading relationship with the EU
• Six in ten would accept more EU regulation to make closer trade ties possible
• Just 16% say Brexit has had a positive impact on their business, whilst more than double (35%) say the effect has been negative
• Overall, 62% of SME leaders would vote to rejoin the EU, compared with 29% who would stay out, with at least half backing rejoin in every UK region

New research from iwoca, one of Europe’s largest SME lenders, finds that a decade on from the UK’s 2016 Brexit vote, the majority of the UK’s small and medium-sized enterprise (SME) leaders want to rebuild trade ties with the EU, and most are willing to take on more regulation to do so.

The poll of over 1,000 UK SME owners finds that almost three-quarters (74%) of SMEs say the UK should have a closer trading relationship with the EU, against just 18% who disagree. Six in ten (60%) would back a closer relationship even if it meant abiding by more EU regulation.

Asked how they would vote if a referendum were held tomorrow, 62% of SMEs say they would rejoin the EU, against 29% who would stay out. 

SMEs identify Brexit pain points

As politicians continue to debate the UK’s relationship with the EU, few SMEs say they have seen any upside from Brexit. Just 16% say it has had a positive impact on their business, while a third (35%) say the effect has been negative. Almost half (44%) believe the vote to leave the EU has had no impact on their business.

While parts of the Brexit campaign argued that leaving the EU would leave the UK with greater regulatory freedom, that is not what respondents describe. Of the 35% who say Brexit has harmed their business, more than half (55%) say they now have to comply with more rules and regulations – the most common complaint. Nearly half (45%) say it has become harder to hire people from the EU, and 43% say it is now more difficult to sell their goods and services overseas.

Most SME bosses would vote to rejoin

The appetite for rejoining is consistent across the country, with at least half of small business leaders backing rejoin in every UK region. That support extends into areas that backed Leave a decade ago. While 53% of Welsh voters sided with Leave in 2016, it is now the joint-highest region for rejoining at 69% among SME leaders, level with London. 

Similarly, despite 53% of voters in England voting Leave in the referendum, 62% of English SME bosses today say the UK should rejoin, with just 30% saying the UK should stay out. 

Christoph Rieche, CEO and co-founder of iwoca, said: “The message from British SMEs is clear. Anyone serious about economic growth needs to put a closer relationship with the EU back on the agenda. As a British-German business with offices in London, Leeds, Frankfurt and Berlin, we see this on both sides of the Channel every day. The economy has always been more pragmatic than politics. Small business leaders are not asking for a political project - they want reliable conditions to hire, trade and grow, and ten years on, Brexit still hasn’t delivered them.”